Engie looks for more banks for TAG loan

Engie looks for more banks for TAG loan

Loans Energy Gas Debt Brazil Europe

Engie is helping banks find other lenders for a 12-year, $2.45bn loan to fund the acquisition of the TAG natural gas pipeline in Brazil, said Raphael Barreau, the head of acquisitions, investments and financial advisory for the French energy company in Brazil.

"There is a lot of new and renewed interest. We are seeing a shift in terms of debt providers and investors, pension funds and players who take on a long term, a lot of them who previously didn't want to be a part of that asset for various reasons," Barreau said at LatinFinance's 4th Latin America Project and Infrastructure Finance Summit in New York on Thursday.

"Yields on the debt have come down, and the return for equity investors will come down too," he said.

Another four or five lenders are expected to join the dollar-denominated loan before it closes, he told LatinFinance at the event.

Engie and the Canadian pension plan Caisse de dépôt et placement du Québec (CDPQ) agreed to buy 90% of TAG from the state-owned oil company Petrobras for $8.6bn in April this year. The pair lined up $5.95bn in financing for the acquisition, including the $2.45bn dollar loan and a seven-year, BRL13.5bn ($3.31bn) loan in Brazilian reais. Engie also sold BRL14bn in debentures in June to fund part of the deal.

BNP Paribas, Crédit Agricole, ING, Mizuho, MUFG, Société Générale and SMBC participated in the dollar loan, while Banco do Brasil, Bradesco and Itaú BBA led the financing in local currency.

The French company and its Canadian partner raised the remaining $2.8bn in equity. Petrobras kept a 10% stake in TAG.

Brazil's national energy policy council, or CNPE, approved regulations in June to reduce Petrobras' dominant position in the natural gas market. The new regulations and other measures from the government have stirred increased interest from investors Barreau said. In regards to TAG, he said that Engie will have to renegotiate gas transportation agreements in 12 years due to the new rules.

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